Accused insider trader 'made $2.5m in a day'

One of two men charged with insider trading on the basis of advance knowledge of sensitive government statistics had a field day on March 13, police say.

That was the day Lukas James Kamay allegedly made more than $2.5 million after the release of surprisingly positive jobs data.

To generate a profit of that magnitude on currency and derivatives markets indicates a bet may have been taken with an implied value of about $500 million, traders say, based on information about currency movements that day.

Among other splashy purchases, the 26-year-old banker successfully bid for a $2.4 million apartment designed by contestants on reality TV show The Block.

Official sources have confirmed Mr Kamay bid $2.375 million - a massive $616,000 above the reserve - for the three-bedroom loft apartment designed by twins Alisa and Lysandra in the inner-Melbourne suburb of Albert Park.

It is understood he put down a $500,000 deposit for the fully furnished luxury property at 47 O'Grady Street, and it is among the assets frozen in the joint sting by Australian Federal Police and the Australian Securities and Investments Commission.

At 11.30am precisely, on the second Thursday of March, the Australian Bureau of Statistics published labour force data that showed employment surged by 47,300 in January.

The increase stunned economists, who had forecast a gain of less than one-third of that.

The figures were interpreted by many investors as a potential sign Australia's economy was on the mend and would lead to official Reserve Bank interest rates rising earlier than anticipated.

In the micro-seconds after the figures were sent to trading screens around the world by agencies such as Bloomberg and Reuters, the Australian dollar rocketed from US90.16¢ to as high as US90.81¢. Data logs from Reuters indicate the dollar quickly settled to between US90.55¢ and US90.65¢, and remained in that range for the rest the day.

According to Australian Federal Police documents tendered to a Canberra court on Saturday, Mr Kamay's trade on March 13 was highly lucrative, one of 23 separate bets taken between September 12, 2013, and last Thursday.

In total, during his eight-month stint of trading, Mr Kamay is accused of generating a net profit of about $6.98 million from inside trading using data releases on jobs, retail sales, building approvals, capital expenditure and housing finance figures.

Based on information about those reports given to him by his accomplice - Canberra-based Australian Bureau of Statistics employee Christopher Russell Hill - Mr Kamay allegedly used foreign exchange derivative contracts bought in the minutes before the regular 11.30am ABS data release and sold shortly afterwards.

Derivatives enable traders to "leverage up" their exposure to a market. For instance, a trader granted a leverage ratio by their broker of 200:1 would need to deposit $500 with the broker to secure a single contract for $100,000; or $500,000 for 1000 contracts worth $10 million.

According to one market participant, derivatives are a "zero-sum game". "If he made $2.5 million, someone else lost $2.5 million," the source said.

For many of his trades, Mr Kamay used an Apple iPhone, and is accused by police of deliberately creating losses to "normalise" his trading patterns and avoid detection by police, regulators and other traders or brokers.

On April 2 and 3, Mr Kamay lost $62,121 and $55,765 respectively. His final trade - again on an ABS jobs report - resulted in him losing $779,955.